Apec: The road to Lima

I returned last week from Tokyo from our third quarterly meeting of the Apec Business Advisory Council (Abac). Our first two meetings were in Kuala Lumpur and Hong Kong. Our final meeting will be in Lima, Peru, which will also host the Apec Leaders Meeting and the Apec CEO Summit.

The Asia Pacific Economic Cooperation (Apec) community is composed of 21 economies originally founded as a regional forum in 1989 and expanded periodically until 1998 to create “greater prosperity for the people of the region by promoting balanced, inclusive, sustainable, innovative, and secure growth and by accelerating regional economic integration.” The group accounts for about half of the world population, 62 percent of global GDP, and 47 percent of global trade. Apec is the Philippines’ largest trading “partner,” accounting for 85 percent of the country’s exports and imports.

Traditionally, Apec has been associated with free and open trade and investments within the region although it deals with more issues to cover the complexities of today’s global economy. These issues include climate response, sustainability, digitalization, technology, and artificial intelligence (AI).

Abac’s job is to discuss and analyze issues and advise senior government officials, ministers, and leaders (e.g., presidents and prime ministers) of the 21 economies. The theme for this year has been “People, Business, Prosperity” and all recommendations have been aligned with this theme. These recommendations will go into a report to leaders to be delivered to at the Apec Leaders Meeting in Lima this November as well as during the traditional Abac Dialogue with Leaders.

Moreover, recommendations have been delivered or finalized for ministers of trade, finance, health, energy, food security, and small and medium enterprises.

The main recommendations cover a lot of ground but can be divided into three broad areas: regional economic integration, human development, and sustainability.

Under regional economic integration, the foundational piece remains building a Free Trade Area of the Asia Pacific. This has been the cornerstone of Apec’s economic policy. Over time, significant nuances have been added to this foundation in the form of calls for paperless trade, digitalization, and digitally delivered services, green and resilient supply chains and trade, and improvements to access to venture capital for women. Abac has also started meeting and giving recommendations to the World Trade Organization, including strengthening and updating its rules and reinstating its dispute settlement system. AI has been recognized for its potential to bring good but many in the business community also call for appropriate “governance guardrails” to ensure AI’s responsible use and guard against misuse.

Under human development, discussions range from data sharing in digital health to ensuring more access to the green economy and green jobs to building a larger digitally skilled workforce. Significantly for countries with large “underground” sectors, studies are underway to see how the informal sector can transition to the formal economy through digitalization and access to finance. While many in the informal economy already use some form of technology (e.g., e-commerce and digital payments), preliminary findings show how much growth and impact these businesses can have once they enter the formal, above-ground economy.

Sustainability has been one of the most active areas of engagement for Abac. Areas of concern have included food security and securing food sustainability, responsible natural resource management, promoting circular economy and waste management, energy transition, sustainable growth for the electric vehicle supply chain, promoting interoperable voluntary carbon markets, establishing a green trade framework, and enhancing natural disaster risk preparedness through public-private partnerships and innovative solutions such as disaster risk insurance, catastrophe bonds, and epidemic risk platforms.

One of the challenges facing businesses is the plethora of sustainability disclosure requirements across Apec. Abac has advocated some standardization of the mandatory disclosure requirements through guideline harmonization and reporting timelines across jurisdictions.

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What’s at stake

With three-quarters of the work done after the Kuala Lumpur, Hong Kong, and Tokyo meetings, all that remains is to put the final touches together and deliver a set of recommendations to leaders after another busy year at Abac. It’s been a long road to Lima but I hope we’ve been able to deliver on the theme “People, Business, Prosperity.”